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Why Your Debt Could Be Killing You -- Literally

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Americans who unexpectedly find they can’t pay their bills are at a greater risk of dying, according to a new research report from the Federal Reserve Bank of Atlanta. The research also found that a significantly improved credit score can lead to an increase in life expectancy.

The report determined that people’s mortality rates rose by 5 percent when they suddenly fell behind on their debt payments due to a sudden macro event such as a recession. But the risk of death was reduced by more than 4 percent if an individual’s credit score increased by 100 points.

Delinquency had the biggest impact in the short term. Individuals were far more likely to die from an immediate debt shock than from lingering debt.

“Our research sheds light on the extent to which macroeconomic shocks, like the Great Recession, adversely impact individual health,” said economist Laura Argys, who authored the study along with economists Andrew Friedson and M. Melinda Pitts. “Debt resulting from the financial crisis has had lasting effects on health that are substantial enough to increase mortality rates.”

The research also found that debt shocks hurt the mortality rates of older individuals more than younger people. This could be because older people have more fragile health, the report noted, or have less volatile finances, so delinquency is more unexpected. Or, it could be generational differences rather than age that make the difference.

The economists believe that their study shows the importance of economic policies during a recession to improve both financial and physical well-being. “Any policy that has an impact on individual financial wellbeing also has an impact on individual health,” writes Friedson. “That means economic policy is, by extension, health policy.”

The research analyzed 170,000 individuals from the Federal Reserve’s Consumer Credit Panel, a nationally-representative random sample of U.S. consumers with credit report and financial data. This panel follows individuals from 1999 to the present.

The authors also controlled for reverse causality, or the idea that bad health causes debt.

Janna Herron is an award-winning senior editor for The Fiscal Times overseeing the Life + Leisure channel that covers financial issues that touch people and their families She holds a bachelor’s degree in English and Drama from Duke University. Follow her on Twitter.